Want to know how to start a property management company? This short guide will give you a great overview of what you need to get going.
How to Start a Property Management Company – An Overview
As you probably already know, property management requires a well-rounded individual. Here are just a few knowledge areas you’ll either need to have or know how to hire for:
• Finding clients
• Working with maintenance contractors
• Marketing your company
• Marketing client properties
• Local real estate laws
Property managers usually handle all areas of the property. When the property is vacant, you help find and screen tenants to fill the property. When a current tenant breaks the least, you need to know the legal process to evict them.
Where to Learn More about Property Management
This may sound obvious, but it’s still worth saying – before officially launching your business, make sure you’re in it for the long haul!
If you aren’t entirely sure what being a property manager entails, learn more about the business as a whole before diving in. Fortunately, there are a few ways to do that.
Take Local Classes – Check out your local community colleges to see if they offer classes on property management or real estate. They are usually very inexpensive and will give you a great foundation to figure out if this is really what you want to do.
The secondary- and perhaps most important – benefit is the opportunity to network with like-minded folks. You may meet your next mentor or business partner.
Online Courses – If you can’t find local classes, look online. You can either take online courses from a traditional college or a site like Coursera or Udemy. Or you could just search on YouTube to see what the industry entails. YouTube wouldn’t give you any certificate, but it is an excellent tool for learning about any topic you want.
Talk to a Property Manager – Whether you take classes or not, you should sit down over coffee with a few experienced property managers. They can tell you about the day-to-day activities as a PM, what to expect, how to educate yourself, etc.
There are a few ways to find someone to talk to. One is your network – just ask your friends and family if they know anyone. If they don’t, they can probably at least point you to a realtor or real estate agent that can help. Other options are LinkedIn or just Google.
Books – Besides just searching around online, books on property management are probably the most cost-effective way to learn about the industry. Amazon is the best place to look – just type “property management book” in the search engine.
What Do You Need to Start a Property Management Business?
Most states require you to have some real estate license. Knowing real estate is critical because it helps you understand the market and advise your client (the landlord.) Check your state to see if you need a real estate license. But if you’re reading this article, I guess you already have one.
Something else you should do is register your business with your local government. We recommend creating either an LLC, C-Corp or S-Corp business. These are important because they act as legal entities. That means if your business gets sued one way or another, it will (theoretically) be separate from your assets. If you lose the lawsuit, only business assets would be lost- not your home, savings, etc.
Even though it’s not necessary, you will struggle without a website. A basic website isn’t difficult to set up and gives your business a “home base.” These days, having a website is even more important than renting office space. You can always set up office at a co-working space, but without a website, your digital presence is lacking.
Finally, you should consider investing in property management software. This will help you maintain properties more easily, giving you more time to be strategic such as reach out to new clients.
How to Jumpstart Your Property Management Business
The hardest part of starting any business is getting your first customer. Property management companies have two types of customers:
2) Individual landlords
When starting the company, you need an idea of which type of customer you’ll focus on. We recommend you start with individuals. There are two main reasons why.
Expectations – A large investment company will expect their property managers to have full-time support staff, lots of experience, an existing portfolio, etc. They will be very reluctant to entrust their properties to someone brand new. Individuals, on the other hand, maybe more flexible here.
Network – It’s easier to leverage your network to connect with individuals. There are likely hundreds, if not thousands of individual landlords relatively close to where you live. There’s no shortage of clients; you just have to make your way in with them.
How do you get in with these clients? Hang out where they hang out. Go where the fish are biting.
That means joining local real estate investment groups. You can just use Google to find them, or a website like Meetup or Facebook. Besides acting as a great launching pad for your property management company, this will also open opportunities to learn from experienced investors and property managers.
How to Market Your Property Management Company
Even after you get a client or two, you will need to keep marketing the company. There are countless ways to do this (on top of what we mentioned earlier,) but here are a few great ways to get results fast.
Paid Advertising – This is a great way to get in front of your prospects quickly. Sites like Facebook, Google, and LinkedIn give you a lot of great targeting options to make sure the right people see your ads. For example, you can target people based on what they’re typing into search engines, their job titles or where they work.
Cold Calling/Emailing – This isn’t fun, but it still works. In fact, because a lot of businesses have stopped cold calling to focus on other methods, there is a wide-open door for you.
Joint Ventures – This is interesting and a bit unconventional, which is why it can work so well. A joint venture is when two companies partner on something together to benefit both. In this case, you can work with a company who regularly interacts with your target market.
For example, maybe you know a local gym that has an affluent customer base. Talk to the gym about allowing you to leave your business card on the counter, or hosting events to educate their customers on investing in real estate. If a referred client signs up with you, the gym (or gym owner) can receive a commission check from you. Similarly, maybe you offer to manage the gym for a huge discount, and in return, they promote your service.
There are other types of joint ventures too, like having a property management company partner up with an investment firm.
That’s all you need to know how to start a property management company. Even though there’s more to it – such putting together contracts and hiring staff to support you – this will help get your business launched. Good luck, and be sure to invest in some great property management software to help.